Automatic stay: A court order under 11U.S.C. §362 that stops creditors from attempting to collect debts from the debtor once bankruptcy is filed. This is the most powerful tool of the bankruptcy court and code.
Bankruptcy petition: The document filed with the bankruptcy court to initiate the bankruptcy process. The petition is a 5 page document. The petition should be filed with additional documents, statements and schedules.
Chapter 7 bankruptcy: Also known as "liquidation bankruptcy," it involves the liquidation of the debtor's non-exempt assets to pay off creditors.
Chapter 13 Plan: A plan filed in Chapter 13 bankruptcy that outlines how the debtor will treat and pay their debts over time. A chapter 13 plan does not mean that all creditors will be paid in full. For example, a plan can propose to pay unsecured debts 10 cents on the dollar if other elements are met.
Creditor: A person or organization to whom the debtor owes money. Creditors can be secured or unsecured.
Debtor: The individual that owes debts to creditors.
Discharge: The legal release of a debtor from their debt obligations after bankruptcy proceedings are completed.
Discharge Injunction: Once the debt has been discharged there is no automatic stay. Instead the discharge injunction takes over to protect the debtor from creditors whose debts were discharged in the bankruptcy proceeding.
Equity: The value of an asset minus any liens or loans against it.
Exemption: A provision in the bankruptcy code that allows a debtor to protect certain assets. Exemptions vary depending on where you resided in the two years before filing a bankruptcy.
Liquidation: The process of selling assets to pay off creditors.
Means test: A calculation used to determine whether a debtor is eligible to file for Chapter 7 bankruptcy based on their income and expenses.
Non-exempt assets: Assets that are not protected by exemptions and are subject to being taken by the bankruptcy trustee to pay off creditors.
Priority debt: Debts that are given priority over other debts in bankruptcy, such as taxes or child support.
Reaffirmation agreement: An agreement between a debtor and a creditor to continue paying a debt after bankruptcy.
Secured debt: A debt that is secured by collateral, such as a car loan or mortgage.
Trustee: The court-appointed official who is responsible for managing the bankruptcy estate and liquidating non-exempt assets to pay off creditors.
Unsecured debt: A debt that is not secured by collateral, such as credit card debt or medical bills.
Unsecured creditor: A creditor who does not have a lien or security interest in any of the debtor's assets.
Voluntary petition: A bankruptcy petition that is filed by the debtor.
Wage garnishment: A court order that requires an employer to withhold a portion of an employee's wages to pay off a debt.
341 meeting: Also known as the "creditors' meeting," it is a meeting between the debtor, bankruptcy trustee, and creditors to discuss the debtor's financial situation and assets.
Bankruptcy estate: All of the debtor's property and assets that are subject to being liquidated to pay off creditors.
Chapter 7 trustee: The bankruptcy trustee appointed in a Chapter 7 case.
Conversion: The process of changing a bankruptcy case from one chapter to another, such as converting from Chapter 7 to Chapter 13.
Credit counseling: A requirement for all bankruptcy filers to complete a credit counseling course before filing for bankruptcy.
Debtor education: A requirement for all bankruptcy filers to complete a debtor education course before receiving a discharge.
Means test income: The income used in the means test calculation, which includes income from all sources, such as wages, rental income, and investment income.
No-asset case: A Chapter 7 case in which the debtor does not have any non-exempt assets that can be liquidated to pay off creditors.
Secured creditor: A creditor who has a lien or security interest in the debtor's property, such as a mortgage lender or